Unfortunately simply looking at the balance sheet only gives you a starting point. The actual market price of asset by a company can vary dramatically from the price it is carried on the book.
Still I think the P/B is a useful valuation metric for the right type of company, such as traditional manufacturing company or a resource company (i.e. oil).
I think one of the advantages of value investing, especially P/B, is that very few people are willing, let alone able, to do the gruntwork to value the assets. Probably some of the most astute value investors are professional shorters, who are routinely castigated for their efforts. And I'm aware of at least two members of this board who made a living out of reading the extremely fine print in bond issues and determining their "appropriate" market values.
For example, an asset carries one value in America but the same asset would carry a completely unrelated value in Europe, where there are different accounting standards for aspects like depreciation. Or a company chooses a different inventory-accounting system, like FIFO instead of LIFO, which produces huge advantages over decades of use in their business.
Ben Graham's search for below-book and margin-of-safety companies got him a lot of "cigar-butt" companies (one step away from bankruptcy or liquidation) and "workouts" (needing a complete overhaul to recover). Buffett's contribution to the genre was passing by these profitable yet high-effort low-reward opportunities in favor of businesses with great franchises/brands (another asset whose book value is extraordinarily difficult to determine) or those with an ability to spew cash (whether or not they were actively spewing at the time).
And then we have to determine the book value of uninsured uncollateralized derivatives, collateralized debt securities, and mortgage-backed securities... a skill that apparently is still difficult to rationally execute.
But the answers to your questions, Sevo, are "Yes", "No", and "Yes". That's someone's estimate of what Dow's hard assets would sell for (in a liquid marketplace with no urgency to sell). Stockholders are the last class of investors to claim a company's assets, after investors like holders of bonds & preferred stock. Stock owners usually get zip from a liquidation or a bankruptcy. And while Kaiser may be estimated to be selling at that type of discount, the only thing that really counts is your ability to hold on to the stock until someone recognizes your prescience.
In general, though, if you buy an index of stocks selling at lower values of price/book than other stocks, over a decade or two your returns (as well as your volatility) will be higher.
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